Welcome to Bimmerfest -- The #1 Online Community for BMW related information! Please enjoy the discussion forums below and share your experiences with the 200,000 current, new and past BMW owners. The forums are broken out by car model and into other special interest sections such as BMW European Delivery and a special forum to voice your questions to the many BMW dealers on the site to assist our members!

Ten years ago, BMW AG looked into the future and concluded its business was in danger of running out of gas.

Through the 1980s and early 1990s, BMW had been one of the world's most ingenious marketers of luxury goods. With pinpoint precision, it identified a swelling class of prestige-minded yuppies and built them the cars they craved: sporty sedans that weren't flashy but could outrun just about anything else on the road.

The car maker kept it simple: Its trademark 3, 5 and 7 series coupes and sedans all had the same basic design. BMW's planners called the concept "Eine Wurst, drei Grösse" -- one wurst, three sizes. BMW's white and blue hood emblem became a world-wide symbol of achievement.

But in the late 1990s, BMW sensed that the attitudes and values of luxury-car buyers were shifting. Many were placing more emphasis on family and leisure time. These new upscale consumers included aging baby boomers, yuppies who went on to start families, and liberal-minded professionals who piled up wealth in the '90s boom. For them, sporty sedans alone wouldn't cut it, research indicated. They wanted more vehicle choices and more eye-catching designs to suit their changing lifestyles.

With its future at stake, BMW made an ambitious gamble: It spent billions of dollars to broaden its single, narrow product line into a whole spectrum of upscale cars. It acquired Rolls Royce and relaunched the Mini, the British cult car of the '60s. It put the BMW brand on sport-utility vehicles, convertibles, roadsters and, most recently, a compact car.

At the same time, BMW has completely remade the 3, 5 and 7 Series. Sensing the one-wurst look had become boring, it has given each car its own distinctive design of sculptured curves and creases, and infused them with advanced electronics to make them luxurious as well as sporty to drive. The new 5 and 7 Series are out now; the redesigned 3 Series is on the way.

"We had to do something different," says Helmut Panke, BMW's 56-year-old chief executive. If BMW had continued on its old path, with the same three nearly identical sedans, "we would be in a dead end as a brand and as a company."

BMW is now about halfway through its massive overhaul. In the past four years, while most car makers' sales have stagnated, BMW's vehicle sales have soared 34%. But signs of trouble are cropping up, raising questions about whether the strategy will prove successful in the long run. The new curvy styling is turning off some longstanding fans. Some of the new technology has glitches. Meanwhile, competitors like Cadillac andNissan Motor Co.'s Infiniti brand borrowed from BMW's old strategy and produced faster, sportier sedans. They're now pulling in some disaffected BMW fans.

As a result, the new-look 5 and 7 Series are slumping in the U.S., BMW's biggest market. Another sign something isn't working: BMW in the past year has resorted to something luxury-car makers loathe -- price-cutting.

This year, BMW will face two critical tests of its strategy. In the spring, the new-look 3 Series will debut. Mr. Panke says BMW "has listened to the feedback" about its recent designs and promises the new 3 Series is less of a departure from BMW tradition than the already-launched 5 and 7 Series. A slip-up with the new 3 Series, BMW's top-seller and the icon of its brand image, might force a re-think of the design direction. "This has to appeal to the BMW hard-core," Mr. Panke says.

Later in the year BMW will decide if it is going to green-light a new vehicle that risks further stirring up purists in BMW's following. It seats seven passengers and is a kind of minivan, although Mr. Panke declines to call it that. Inside BMW, it's known as the "Raumfunktionales Konzept" -- space-functional concept. If BMW decides to go ahead with the car, it won't feel anything like a minivan, Mr. Panke says. "It will drive like a BMW."

Although it has one of the strongest brand names in any industry, BMW is only the world's 14th-largest car maker as of 2003. Unlike most of its competitors, BMW doesn't strive to compete in every segment of the auto industry. Instead, the Munich-based company shuns the high-volume market of middle-of-the-road vehicles and focuses strictly on premium-priced cars. The Mini, for example, is smaller than a Honda Civic, but is priced at about $3,000 more.

This strategy has made BMW, despite its relatively small size, one of the world's most profitable car makers. In 2003, its automotive operations generated $3.5 billion in operating profit, more than those ofGeneral Motors Corp.,Ford Motor Co.,Volkswagen AG andRenault SA -- combined.

The remaking of BMW sprung from an exhaustive study jointly funded in the 1990s by European car makers including Mercedes, Volvo, Audi and BMW. It was carried out by Sigma, a German research firm that had pioneered a method of predicting shifts in consumer tastes.

Sigma's technique looks beyond demographics such as age and income. It often interviews consumers for hours and even photographs their homes and offices to build a picture of the mindset of different consumers. Its work for the car makers found the yuppies of the '80s and '90s -- a group it called "social climbers" -- were motivated almost exclusively by professional success. They put work first and gladly flaunted their wealth. For them, driving a Bimmer was the perfect way of saying "I've made it."

But Sigma found this greed-is-good, look-at-me attitude was becoming passé by the late '90s. For BMW, there would be little growth in its future if it stuck with serving just its hard-core customers.

Sigma predicted -- correctly, it turned out -- the luxury-car market was headed for a significant expansion. As the yuppie lifestyle goes out of fashion, Sigma said, other groups with different upscale mindsets would increase in number.

One group, dubbed "upper liberals," includes socially conscious, open-minded professionals who hit it big in the '90s. Some are former yuppies who have gone on to have kids. They are still professionally ambitious, but now take time out for family and demanding hobbies like skiing, triathlons and mountain biking. Sedans don't have the room or flexibility for their active lifestyles. In the past they often leaned toward Volvos, Saabs and sport-utility vehicles.

"Post-moderns" are high-earning innovators like architects, entrepreneurs and artists. They are highly individualistic and gravitate toward head-turners like convertibles and roadsters.

Another group called "upper conservatives" is made up of wealthy, traditional thinkers. They've never been that interested in driving sporty cars like BMWs, and prize luxury and comfort over driving performance. In their minds, the Mercedes S-Class and Jaguars set the standard for elegance and sophistication.

A final group in the Sigma study consists of upper-middle-class consumers at the top of a milieu known as the "modern mainstream." Like upper liberals, they are family-oriented and active. Typically they leaned toward near-premium brands Honda or Volkswagen; BMWs were too expensive for them. But increasing numbers of them are looking to move up above the middle class and are open to luxury-brand cars.

With this thinking as its roadmap, BMW began spending billions of dollars to remake its product line. For upper liberals, it added the X5 in 1999, an SUV that the company prefers to call a "sports activity vehicle," in a bid to appeal to this group's active lifestyle.

In 2001, it launched the new Mini, aimed at upper-middle-class buyers who aren't quite affluent enough to buy a BMW branded car. This group is also the target market for the new BMW compact, the 1 Series, which just arrived in Europe. It's due in the U.S. in 2006 or 2007.

A BMW-developed Rolls Royce -- the $325,000 Phantom arrived world-wide in 2003 -- is intended for the very wealthiest upper conservatives.

The most jarring change came in the redesign of the 3, 5 and 7 Series, the company's core vehicles. BMW's American-born chief designer, Christopher E. Bangle, gave them a futuristic design. Mr. Bangle, who joined BMW in 1992 after stints at Fiat and GM's European Opel operations, says BMW's goal is to create art on wheels.

The first of the series to be redesigned was the 7 Series, which was aimed at upper conservatives. In a bid to appeal to their appreciation for luxury, comfort and no-hassle driving, the new 7 Series was loaded with electronics: computerized suspension to smooth out bumps in the road, push-button ignition to eliminate the chore of twisting a key, and more than 100 microprocessor-controlled motors to adjust the windows, seats, airflow and lights.

To control so many features, drivers use a knob on the console, called iDrive. Like a computer's mouse, it can point-and-click through menus on an in-dash display.

A new 5 Series with a similar look arrived in 2003. Last year, BMW added two more vehicles: the 6 Series, a flashier coupe derivative of the 7 Series intended for post-moderns, and the X3, a less-expensive SUV targeted at the modern mainstream.

Although all the new models have lifted world-wide sales, BMW has hit some bumps along the way. Some fans complained the 7 Series' bulbous trunk lid looks like it was glued on as an afterthought. On the Internet a "Stop Chris Bangle" petition drew thousands of postings.

The aggressive styling has "caused some customers to not want to move forward," says Frank Ursomarso, who's been selling BMWs for 28 years at Union Park BMW in Wilmington, Del. "Sometimes you can be too far ahead."

That was the case last summer when Shannon Yauchzee considered the new 5 Series. A die-hard BMW fan, the 39-year-old civil engineer has owned seven BMWs in the past 11 years. He belongs to the BMW Car Club of America and teaches performance-driving classes for its members on weekends.

But he sat in the 5 Series for only a few minutes and then walked away. "I didn't bother to drive it," he explains. "I just couldn't get past the styling." In August, he got a new ride -- a $48,000 Audi S4 with a V8 engine, an option he couldn't get in the BMW's comparable model, the 3 Series.

The new electronics have caused problems. Frustrations with the iDrive control system lead some owners to call it "why-Drive" or "iDunno." Glitches in other components sent customers back to dealers again and again in search of fixes, denting BMW's reputation for quality. In a recent issue of Consumer Reports, not a single BMW was judged reliable enough to make the magazine's 2005 recommended list.

"We are not at the reliability level that we have to be at for our customers," Mr. Panke admits.

Competitors' sportier new sedans like the Cadillac CTS and Acura RL are also starting to give BMW trouble. Retooled with bigger engines and more advanced steering and suspension systems, these cars have narrowed or even erased BMW's lead in handling and performance.

Last summer Godfrey Chua, a market researcher in Boston, was looking to replace his 1994 BMW 530i. He had his eye on a new 3 Series, but after test-driving and comparing it to alternatives, he drove off in an Infiniti G35 coupe.

His new car is slightly less agile than its BMW counterpart, the 3 Series, he says, but is a bit quicker since its engine is more powerful -- 280 horsepower compared with 225 for the 2004 3 Series. And his G35 cost $33,600, $7,000 less than a comparably equipped 3 Series. "You don't have to pay BMW money to get BMW performance," he says.

BMW finished 2004 with mixed results in the U.S. market. U.S. sales of BMW-branded vehicles rose 8%, but thanks only to the new X3 SUV. Without that vehicle, sales would have fallen 6%. The brand-new 5 Series suffered a 3% drop. That's a jarring reception for a car that rivals routinely admit to using as a benchmark when designing their own luxury models. Sales of the Bangle-designed 7 Series and Z4 roadster fell 21%, and 33%, respectively.

Facing less-than-robust demand, BMW has had to prime sales with profit-eating incentives. It subsidized leasing deals on the X3 for most of the year. In December it held a year-end clearance sale in the U.S., the first time it's ever done so. Recently a $5,000 rebate was offered on the Z4 roadster through a promotion run by American Express Co.

Mr. Bangle, BMW's head designer, shrugs off suggestions that his designs have scared off buyers. "We're not trying to be everybody's darling," he says in an interview. "Sometimes you leave people behind. But then you also pick up some new people."

Mr. Bangle, BMW's head designer, shrugs off suggestions that his designs have scared off buyers. "We're not trying to be everybody's darling," he says in an interview. "Sometimes you leave people behind. But then you also pick up some new people."

That same arrogant attitude almost put Porsche out of business in the late 1980's.

That same arrogant attitude almost put Porsche out of business in the late 1980's.

Yep. I think its now clear to everyone but BMW, that while they needed a new strategy to deal with the current environment, they probably should've kept their core 3,5, and 7 more conservative. They could've had their cake and eaten it too by still buying Rolls Royce, Mini, and introducing BMWs into new niches like SUVs and roadsters. Its the gorwth of the Mini and their SUVs that is fueling their current growth; the strategy they took with their core models is hinering growht.

Yep. I think its now clear to everyone but BMW, that while they needed a new strategy to deal with the current environment, they probably should've kept their core 3,5, and 7 more conservative. They could've had their cake and eaten it too by still buying Rolls Royce, Mini, and introducing BMWs into new niches like SUVs and roadsters. Its the gorwth of the Mini and their SUVs that is fueling their current growth; the strategy they took with their core models is hinering growht.

Interesting point. What I'm curious about is tha tRolls will never be a BMW brand. If they rebranded (Rolls Royce by BMW), the loyalist would bail. So what does it get them? It's more just corporate diversity--do Rolls buyers care that BMW is behind the operation?

As of now, they may have a lot of different sausages, but few of them taste good.

As someone that works at American Express, teaches marketing for a living and is a BMW enthusiast, few remarks on the article.

First, the American Express one. The author was inaccurate in stating that BMW offered a $5,000 rebate. As part of our new marketing campaign -- My Life, My Card -- American Express offered 5 Z4's for sale at $5,000 for a lucky customer who is successful enough to click at the right time (9 different timeslots were chosen, and the server was severely backlogged at those times).

Secondly, the marketing strategy outlined in the article is sound. The segments that they talk about are very interesting and, indeed, should work. Something that is out of the realam of understanding of any journalist, even one writing for WSJ, is that strategies are made to be adjusted. When BMW chose the strategy, the path they are on right now, was chosen in late 90's when NONE of the current competitors to BMW were in market. As evident by the article and by certain actions from BMW they are adjusting their strategy to try to compensate for the gap that they are facing right now. (ZHP option package on the E46 3, redesign of iDrive, better designs of 3,5 (possibly)) Other companies, Caddillac, Infiniti, and to a certain extent Audi, put in front of them a single goal -- beat BMW in United States. They have achieved that goal. Now do they have a long term strategy is BMW responds in kind? We shall see.

Companies play to win -- make the most profit. So far BMW is coming out ahead on the profit front. If they can adjust their US strategy and keep up their profits they will continue to win, and many enthusiasts will continue to whine because little things that only they care about are not being addressed by the mass market corporation.

I don't know what to make of BMW anymore with the X3, X5, "Raumfunktionales Konzept" and the 6 Series disappointment. The brand no longer sends the clear message of performance luxury car, they have lost that pinpoint precision of "BMW" identity.

There are clearly many other brands that fill the performance luxury market as good or better than BMW... so BMW has followed the Japanese and American carmakers to produce a automobile for everbody.

I guess this is just the evolution of automobile branding and we can never go back to the "good old days".

To me its actually not telling at all, especially the first two graphs. Yes there is a negative growth in sales but we are also looking at a premium luxury segment of cars in the times of ressession in the united states. From this, 7 has held up pretty well, the only disappointment may have been the 5, which may have been a bit extemely designed for the original 5 customer segment, which, as the article points out, has changed.

This will be better viewed as a comparison to other luxury car maker sales in the same period.

To me its actually not telling at all, especially the first two graphs. Yes there is a negative growth in sales but we are also looking at a premium luxury segment of cars in the times of ressession in the united states. From this, 7 has held up pretty well, the only disappointment may have been the 5, which may have been a bit extemely designed for the original 5 customer segment, which, as the article points out, has changed.

This will be better viewed as a comparison to other luxury car maker sales in the same period.

I believe S-class sales grew while 7er sales fell

__________________

Belief cannot argue with unbelief, it can only preach to itTo clasp the hands in prayer is the beginning of an uprising against the disorder of the world.

Maybe they are readjusting the strategy. I did not like the 7 redesign and the I think the redesigned 5 is even worse. But from what I've seen of the 3 series redesign, it is more conservative and does look like a next evolution of the 3 and not a radical departure. My only hope is that BMW can not try to be all things to all people. Have your 3, 5, and 7...add the X5 and a roadster....but when the 6, X3 and now a 1 series is on the way....they are overdoing it IMHO.

BMW - get back to your roots before you go so far down the path that you commoditize your product line.

Incidentally, I for one am taking advantage of a $3800 marketing incentive on the 330i right now and getting one of the last 3-series sedans (e46) before the redesign. I feel fortunate to be getting a ZHP (Performance Package) under invoice. It is a great car....hopefully not the last of the great cars from BMW.

I liked seeing some of Panke's admissions. I agree that BMW needed to make changes, specifically in light of greater product parity by its competition (and to a lesser but still significant degree by market forces) but I think its evident that some of the core changes aren't working.

Something I saw on TV over the weekend was somewhat disturbing (even given its source). In a review of the 645 on Car & Driver TV, it was described as "The Ultimate Isolation Machine." That's the label that used to be put on a Lexus...

Because the US is either the largest or second largest BMW market in teh world. I think we are the largest now, surpassing Germany.

Recently when I was in Europe I saw the ads on signs for the new 1 series, while seeing 5ers in the traffic. Funny thing is, to me they are still same sausage, different lengths, but like bren said, the sausages aren't appetizing.

The problem I see is that the long term buyer will overlook some reliability problems, because they appreciate the marque. But conquest sales do not.

I also wonder how many of the last years "sales" were fairly short term leases. Imagine in 2 years if a flood of off lease cars hit, with sales continuing the same direction.

Yes cmapnies work to maximize profit, but they also have to take along term view. Profit today is fine, but it if puts you out of business next year, did you do the right thing?

Maybe they are readjusting the strategy. I did not like the 7 redesign and the I think the redesigned 5 is even worse. But from what I've seen of the 3 series redesign, it is more conservative and does look like a next evolution of the 3 and not a radical departure. My only hope is that BMW can not try to be all things to all people. Have your 3, 5, and 7...add the X5 and a roadster....but when the 6, X3 and now a 1 series is on the way....they are overdoing it IMHO.

BMW - get back to your roots before you go so far down the path that you commoditize your product line.

Incidentally, I for one am taking advantage of a $3800 marketing incentive on the 330i right now and getting one of the last 3-series sedans (e46) before the redesign. I feel fortunate to be getting a ZHP (Performance Package) under invoice. It is a great car....hopefully not the last of the great cars from BMW.

I don't think a 1-series is betraying their roots. Their cars used to be smaller and lightweight. True, so did most all cars back then, so maybe when you compare to contemporary competitors, they are indeed going downmarket. However, that car is supposed to handle pretty well. If they bring it here, I'd gladly buy one, despite the lack of space. If not, I'll resign myself to getting an Audi A3 Sportback 3.2 quattro with DSG.

they captioned it poorly though. the striking thing is how bad the E60 did at launch and how well the E39 did pre-E60 launch

Incentives were pretty huge on the last season of the E39. One of my colleagues picked up a new 525i with auto/leather/moonroof for about 38K...I just remember being amazed at the deals they were doing. Then enter the E60: offered without big discounts or even full sticker, a higher base price and newer and better option$ and sales dropped a bit. That's not really a big surprise...just simple math.

Incentives were pretty huge on the last season of the E39. One of my colleagues picked up a new 525i with auto/leather/moonroof for about 38K...I just remember being amazed at the deals they were doing. Then enter the E60: offered without big discounts or even full sticker, a higher base price and newer and better option$ and sales dropped a bit. That's not really a big surprise...just simple math.

was the same not true of the Z3 and 7ers?

__________________

Belief cannot argue with unbelief, it can only preach to itTo clasp the hands in prayer is the beginning of an uprising against the disorder of the world.

What's most interesting to me is what the other car-makers are up to. I even read, a short time back, how BMW felt it needed to hold the line on pricing with the E90 because of the strong competition out there.

All things considered, I'll definitely give the new three a look in a year or two, but I'll be looking elsewhere too, can't afford not to.

Quote from Bangle-head at the end was a stunner. We can all go pound sand if we dont like his stuff. What a jerk. I still give it a year or two before BMW finally realizes it's been sold a bill of goods. NEVER desert your loyal customers, especially in pursuit of flighty American rich kids. They forgot that people bought the cars (when they could finally afford 'em) 'cause they were the best damn wheels around. You see Rolex changing its design?

I wonder if there are cultural differences in people's reaction to the Bangle design? I mean, what if the design is meant to pull in more Buyers in Japan and Germany at the expense of a few Americans that might hate the design? Or vice versa. You can't please everybody and it must be difficult to "get it right" every seven years for the same positive reaction across 3 continents.

Maybe flame surfacing is meant to appeal to the Asian market....the biggest future market for BMW? Who knows.....I'm just babbling.

..Quote from Bangle-head at the end was a stunner. We can all go pound sand if we dont like his stuff. ...

Yes you can... as some of us dig the Bangel design... I am with him!! You can please everyone in life, sometimes some people will fall behind times... judging by the current year result, the BMW BOD will not fire CB anytime soon

Quote:

...I still give it a year or two before BMW finally realizes it's been sold a bill of goods. ...

Yeah yeah.... I've heard of the same tune 2 years ago from critics of C.B. and I suspect you'll be singing the same tune 2 years from now while life continues in Bavaria...

Quote:

...NEVER desert your loyal customers, especially in pursuit of flighty American rich kids. They forgot that people bought the cars (when they could finally afford 'em) 'cause they were the best damn wheels around....

Hummm..... I seem to recall the 2002 loyalist b!tching about the same thing..... In fact, everytime BMW comes out w/ a new bodystyle, you will hear the same $hit. I think they've learned to tune out the noise.

I wonder if there are cultural differences in people's reaction to the Bangle design? I mean, what if the design is meant to pull in more Buyers in Japan and Germany at the expense of a few Americans that might hate the design? Or vice versa. You can't please everybody and it must be difficult to "get it right" every seven years for the same positive reaction across 3 continents.

Maybe flame surfacing is meant to appeal to the Asian market....the biggest future market for BMW? Who knows.....I'm just babbling.

Funny- I just had a friend from Munich visit me. He has several friends that work at BMW and is a real defender of all things German. We were talking about design in general; he was telling me how he though good design in general was lacking in the US. I brought up the questionable design of the new BMWs. His response (which was kind of funny) was that "the new designs were because an American was in charge, and that they're not doing well in Germany-- they were meant to appeal to Americans". He said that BMW sales in the US are up. I said true, but its mostly due to the Mini and the SUVs, not the 5,7 and z4. So, if the Gemrans don't like the new designs and Americans don't like it, we politely agreed that maybe the new designs were mostly intended for the Asian market (especially China) where they are actually doing well (I think). His final (very German) thoughts on the subject were that "yeah, well BMW sales are up and they are profitable".

Anway, I've also read the same thing in other sources, the Germans/Europeans in general don't like the designs either. Like I said, if they're thinking that China is now going to become their biggest market maybe they are making the right decision. But, I'd be nervous about turnining my back on 2 of the historically largest markets: US and Germany in pursuit of a developing and still unknown market. Or, maybe BMW really did intend to appeal more to US tastes and it backfired.